EFFECT OF BANK FAILURE ON NIGERIA ECONOMIC DEVELOPMENT
ABSTRACT OF THE EFFECT OF BANK FAILURE ON THE ECONOMIC DEVELOPMENT OF NIGERIA
The impact of bank failure on Nigerian economic development
Banks occupy the most strategic location in the economy's financial system, and for a total of bank to fail between 1992 and 2002, a four-year period, something is clearly wrong.
This research is not adversarial to any other, but rather complementing. Others' works must be utilised here, and responsibility is acknowledged, but everything is done with the goal of finding a long-term solution to the problem of bank collapse.
The study will be based on information gathered from books, journals, annuals, and magazines. All relevant data collected during the collection will be analysed broadly and used to deduce the findings.
Certain questions must be asked during the course of this endeavour. The solution is suggested, and the reasons for the failure are explained, but none of them appear to have fixed the problem.
Thus, the research questions are whether it is the inadequate attention paid to the unorganised private sector in favour of the organised sector (particularly merchant banks).
Is the loss of their capital base as a result of the economy's inflationary trends insufficient? Is it because most banks lack technological expertise? Is it because of insufficient internal control systems and the rate at which Banld 90 is being liquidated?
In response to all of these questions, the researcher discovered that the Nigerian economy is still underdeveloped and that it will take the foresight of every single Nigerian to pull it out of the doldrums.
According to the study, it is only when the economy becomes stable that failure is not entirely absent but is reduced to a rate.
The researcher has determined that everyone, not just the authorities, must play a part.
CHAPTER ONE OF THE EFFECTS OF BANK FAILURE ON THE ECONOMIC DEVELOPMENT OF NIGERIA
1.1 BACKGROUND OF THE STUDY
Over the last few decades, Nigeria has been characterised by its practically crude form in pre-colonial and colonial times. It has advanced to the point where economic specialists can happily thump their chests.
With regard to the institution's ownership structure, the regulatory framework, the instrument used, and the number of formed institutions, Nigeria has the most complex financial system in Africa.
Within the Nigerian financial system, the banking institutions have been the most spectacular in terms of growth, which is understandable given the crucial role that they play in supplying the country's money and credit needs.
The terms “world bank” and “banker” are not used or declined in the Central Bank of Nigeria (CBN) Decree No 24 of 1991, nor in the bank and other financial institution Decree (BOFIO) No 25 of 1991,
but section 2 of the Bill of Exchange Act 1881 provides that bankers include a body of persons, whether incorporated or not, who carry out the business of banking. Section 2 (1) of the Evidence Act defines bankers as “any person or persons, partnership or company carrying on
In light of these highlights, it is easy to understand why the failure of a bank has far-reaching consequences. The ability of a bank to operate successfully is dependent on how well they are able to obtain the public's confidence;
if that confidence is lacking, the gap will be too great for the banks to fill. The effects of bank failure on the economic development of Nigeria can be expressed in a nutshell as follows.
a. Ineffective and inefficient financial intimidation
b. Loss of public trust in the system; greater economic downturn; additional strain on regulatory authorities; intensification of social vices.
There is an urgent need to adopt a variety of remedial measures for the sake of citizens and economic progress.
The failure of a bank today does not imply that the problem is systemic; there must be several ways out of any unfortunate situation. The only snag is how these remedies will be used. These remedies would include:
a. The establishment of a stable political environment.
b. Regulatory agencies must be strengthened.
c. The takeover of all terminally distressed institutions by regulatory entities.
d. Privatisation and commercialization of all state-owned banks.